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I wish Costco were accessible to basically everyone. Among some poorer people I've got to know in the SF Bay Area, having the card and confidence in the means t

I wish Costco were accessible to basically everyone. Among some poorer people I've got to know in the SF Bay Area, having the card and confidence in the means to use it are a mark of the middle class, an aspirational thing. Membership is an up-front cost. That excludes those who can't part with the cash for no immediate benefit. Depending on what you buy, and what else is available around you, breakeven can take a good part of the year and a sizable number of purchases. Basically, you have to have the cash flow to play with money over time, even over a short timeline like an annual membership cycle. Costco also sells many if not all items in relatively large quantity, so membership makes more sense for those who can afford to pre-buy and store more than they need. It's the inverse of something like a so-called dollar store, which is too often where poor people get stuck buying smaller than grocery-standard quantities at higher per-unit costs. Of course, sometimes it makes sense to pool funds, buy together on one membership, and break packs. That costs coordination. Corner stores in poorer areas where I live often do this, with business memberships and resale certificates. At a margin, of course. I can't pretend to truly understand what it's like not being able to afford Costco. But I've had some opportunities to hear people who see it as out of reach. And to make some trips with "guests".

daseiner1 5mo ago
And thereby it is necessarily impossible for Costco to be available to everyone. The spending dynamic you've described is Costco.
jatora 5mo ago
I dont understand this. All Costco memberships are functionally $65 at most. How is this beyond literally anyone in America? Am I so out of touch? Why would corner stores have to pool together to get a membership when they absolutely negate the cost of the membership from the cashback? You only have to spend roughly $6,500/year for the executive membership of $130 to cost zero. That seems like something a corner store in any neighborhood wouldn't have much issue doing. As for the non store owners... $65 is the cost of one or two fast food meals. I don't believe this.
- wavefunction 5mo ago
  You are out of touch
- Spooky23 5mo ago
  You’re probably a professional with a good wage. The working poor are too poor to have much and too rich to be poor and get benefits. They are cashflow constrained. When I coached little league, we had parents who walked miles to games because the bus fare (1.50) for 3-4 people would push them over the edge. Vulture companies like dollar general exist because they sell consumer staples in smaller quantities at a slightly lower price, but much higher unit cost. Costco uses an upfront membership to allow you to buy large units of products at a consistently good price. The consumer needs excess cash flow for it to work. Saving on toilet paper doesn’t work if I can’t make my car payment.
  - jatora 5mo ago
    Shit I guess I'm out of touch lol
    - dullcrisp 5mo ago
      It’s a banana, Michael, what can it cost, $65?
    - unlikelytomato 5mo ago
      Family and neighbors shared Costco memberships when I was growing up. It's still accessible today to anyone who wants it
    - gottorf 5mo ago
      No, you are not out of touch. Functionally everyone can afford a Costco membership and buy staples in bulk at a higher upfront but lower unit costs. The GP's comment about a family of four walking miles to a Little League game because they couldn't afford the bus fare is an extreme outlier. There's a large overlap between people who cannot "afford" to shop at Costco and people who spend hundreds of dollars a month on scratch-offs. Whether or not someone shops at Costco is mostly a function of preferences and behavioral choices, not dollars.
niemandhier 5mo ago
In many cases that is the desired effect: Cashflow constraints are a good predictor for problematic behaviour. Example: Being poor is not the reason for drug addiction, but drug addiction will make you poor in the long run. The one good thing about this is: As low liquidity is often used as a classifier to gate access, a single kickstart payment can sometimes do wonders. A security deposit for a flat and money for a Costco card can change lives.
wespad 5mo ago
In San Diego, we have a discount store called GTM that buys Costco closeouts and scratch-and-dent items and resells them for less. It has a loyal base of bargain shoppers, and it feels a bit like a treasure hunt. You can buy normal or even individual quantities, like a single roll of paper towels, with no membership required. I imagine other big cities have similar stores, probably in lower-income areas, that fill a similar role.
Gareth321 5mo ago
Costo makes almost no money on food sale, and almost all of its profit from the membership fee. It's required for their business model, which is VERY friendly for its employees. This is an example of capitalism done right.
- dghlsakjg 5mo ago
  This is such a misconception/oversimplification that drives me nuts and it is so common. It isn’t at all supported by their filings. In past years their profits match the approximate amount of revenue from their memberships (which, I suspect is the origin of this idea), although recently their profit exceeds their membership revenue by a fair margin (total membership revenue was less than half of operating income for 2025). Membership is not what causes them to be profitable since the “cost” of the membership is operating the rest of the business. You can’t separate retail sales from membership sales since they mutually require each other in the business model. If they got rid of their retail sales (which are, in fact, more profitable than membership sales on their own) then the membership would be worthless. The reverse is not true.
  - Gareth321 5mo ago
    It's true that in recent years profits have exceeded membership revenue, but that still comprises 67% of total profit. It is still a requirement for their business model to operate, unless you're arguing that they would be comfortable with significant losses in the lean years, which I would contest.
    - dghlsakjg 5mo ago
      That’s a deceptive 67%. You divided the pretax membership revenue by their post tax profit. If we use the same math we see that they get almost 70% of their profit from sales at the same time. It falls to less than 50% when you properly compare it to pretax profits. It also doesn’t factor in the 2% rebate that a huge number of members receive. Costco’s total net sales for fiscal 2025 were roughly $268 billion. With executive members driving ~73.6% of that, and a 2% rebate on qualified purchases, a rough back-of-envelope estimate would place total rebates issued in the range of $3–4 billion, but Costco does not publicly break this out as a discrete figure in its financial statements. In any case, I’m not saying it isn’t a significant source of revenue, I’m saying that “they only make money/they make most of their money from memberships” is a deceptive framing that is oft repeated. It makes it sound like they are selling things at cost when they aren’t. Their margins are in line with the grocery industry as a whole. Their pricing is an effect of low opex and volume. They make most of their profit from selling things. If they didn’t charge for membership they wouldn’t lose money.
deleted 5mo ago
[deleted]

daseiner1 5mo ago

And thereby it is necessarily impossible for Costco to be available to everyone. The spending dynamic you've described is Costco.

jatora 5mo ago

I dont understand this. All Costco memberships are functionally $65 at most. How is this beyond literally anyone in America? Am I so out of touch? Why would corner stores have to pool together to get a membership when they absolutely negate the cost of the membership from the cashback? You only have to spend roughly $6,500/year for the executive membership of $130 to cost zero. That seems like something a corner store in any neighborhood wouldn't have much issue doing. As for the non store owners... $65 is the cost of one or two fast food meals. I don't believe this.

wavefunction 5mo ago
You are out of touch
Spooky23 5mo ago
You’re probably a professional with a good wage. The working poor are too poor to have much and too rich to be poor and get benefits. They are cashflow constrained. When I coached little league, we had parents who walked miles to games because the bus fare (1.50) for 3-4 people would push them over the edge. Vulture companies like dollar general exist because they sell consumer staples in smaller quantities at a slightly lower price, but much higher unit cost. Costco uses an upfront membership to allow you to buy large units of products at a consistently good price. The consumer needs excess cash flow for it to work. Saving on toilet paper doesn’t work if I can’t make my car payment.
- jatora 5mo ago
  Shit I guess I'm out of touch lol
  - dullcrisp 5mo ago
    It’s a banana, Michael, what can it cost, $65?
  - unlikelytomato 5mo ago
    Family and neighbors shared Costco memberships when I was growing up. It's still accessible today to anyone who wants it
  - gottorf 5mo ago
    No, you are not out of touch. Functionally everyone can afford a Costco membership and buy staples in bulk at a higher upfront but lower unit costs. The GP's comment about a family of four walking miles to a Little League game because they couldn't afford the bus fare is an extreme outlier. There's a large overlap between people who cannot "afford" to shop at Costco and people who spend hundreds of dollars a month on scratch-offs. Whether or not someone shops at Costco is mostly a function of preferences and behavioral choices, not dollars.

niemandhier 5mo ago

In many cases that is the desired effect: Cashflow constraints are a good predictor for problematic behaviour. Example: Being poor is not the reason for drug addiction, but drug addiction will make you poor in the long run. The one good thing about this is: As low liquidity is often used as a classifier to gate access, a single kickstart payment can sometimes do wonders. A security deposit for a flat and money for a Costco card can change lives.

wespad 5mo ago

In San Diego, we have a discount store called GTM that buys Costco closeouts and scratch-and-dent items and resells them for less. It has a loyal base of bargain shoppers, and it feels a bit like a treasure hunt. You can buy normal or even individual quantities, like a single roll of paper towels, with no membership required. I imagine other big cities have similar stores, probably in lower-income areas, that fill a similar role.

Gareth321 5mo ago

Costo makes almost no money on food sale, and almost all of its profit from the membership fee. It's required for their business model, which is VERY friendly for its employees. This is an example of capitalism done right.

dghlsakjg 5mo ago
This is such a misconception/oversimplification that drives me nuts and it is so common. It isn’t at all supported by their filings. In past years their profits match the approximate amount of revenue from their memberships (which, I suspect is the origin of this idea), although recently their profit exceeds their membership revenue by a fair margin (total membership revenue was less than half of operating income for 2025). Membership is not what causes them to be profitable since the “cost” of the membership is operating the rest of the business. You can’t separate retail sales from membership sales since they mutually require each other in the business model. If they got rid of their retail sales (which are, in fact, more profitable than membership sales on their own) then the membership would be worthless. The reverse is not true.
- Gareth321 5mo ago
  It's true that in recent years profits have exceeded membership revenue, but that still comprises 67% of total profit. It is still a requirement for their business model to operate, unless you're arguing that they would be comfortable with significant losses in the lean years, which I would contest.
  - dghlsakjg 5mo ago
    That’s a deceptive 67%. You divided the pretax membership revenue by their post tax profit. If we use the same math we see that they get almost 70% of their profit from sales at the same time. It falls to less than 50% when you properly compare it to pretax profits. It also doesn’t factor in the 2% rebate that a huge number of members receive. Costco’s total net sales for fiscal 2025 were roughly $268 billion. With executive members driving ~73.6% of that, and a 2% rebate on qualified purchases, a rough back-of-envelope estimate would place total rebates issued in the range of $3–4 billion, but Costco does not publicly break this out as a discrete figure in its financial statements. In any case, I’m not saying it isn’t a significant source of revenue, I’m saying that “they only make money/they make most of their money from memberships” is a deceptive framing that is oft repeated. It makes it sound like they are selling things at cost when they aren’t. Their margins are in line with the grocery industry as a whole. Their pricing is an effect of low opex and volume. They make most of their profit from selling things. If they didn’t charge for membership they wouldn’t lose money.

deleted 5mo ago

[deleted]